SOUTH AFRICA: Producers warned not to erode margins

South African wine producers, many of whom discounted on the back of a weakening Rand last year, should avoid eroding margins as a way of countering the present stronger Rand.

This is the warning by Distell's global wine marketing manager, Peter Hafner, who pointed out that the average 750ml bottle of Cape wine retailed in the UK at £3.60, compared with Australia at £4.35, the USA at £4.05 and Chile at £3.86.

He said that although this was higher than Italy and Germany, it was hardly ideal. It was imperative to service foreign growth markets with well-articulated and clearly positioned brands. In that way wineries would be able to defend margins and develop long-term business strategies in the face of increasing competition.

Hafner cautioned local producers, saying that if South African wines were priced according to the vagaries of currency fluctuations instead of being competitive in terms of value, they ran the risk of endangering the future of the wine export industry.

KWV International has launched the second phase of its assault on the South African market with the introduction of its KWV 3-year-old brandy and Cathedral Cellar and KWV Classic ranges as it expands ...